Analysis on Human Development Index 2019

ETC5510 Group Project, Master of Business Analytics

1 Introduction

The Human Development Index (HDI) emphasizes on capabilities of people and uses it as a criteria for assessing the development of a country (“Human Development Index (HDI) | Human Development Reports”, 2021). The data used here, is extracted from United Nations Development Programme : Human Development Reports.

The data set shows indicative data for countries with very high, high, moderate and low human development. It compares the countries for HDI value, HDI rank(2019, 2018)and SDGs (Sustainable Development Goals) 3,4,5 (2019), where SDG 3 = Life expectancy at birth, SDG 4.3 = Expected years of schooling, SDG 4.4 = Mean years of schooling, SDG 8.5 = Gross national income (GNI) per capita.

The objective of the report is to analyze the data set used, by answering four research questions.

2 Analysis

2.1 To compute the summary statistics for each variable for every Human Development category.

2.1.1 The approximate number of country’s in each degree of human development.

Figure 2.1: Number of Countries in Each Degree of Human Development

• The above figure 2.1, shows that, according to HDI 2019 data, maximum countries are classified as Very High Human Development Countries, followed by High Human Development Countries, Medium Human Development Countries and the least countries are classified as Low Human Development Countries.

2.1.2 Boxplot that summarizes the statistic descriptive-information in each variable and degree of human development.

Figure 2.2: Summary Plot

• Figure 2.2 shows us the position of minimum values, maximum values, Quartile 1, Quartile 2 or median, Quartile 3, and Outlier data values.

• Minimum: The line under the box represents the lowest value in the data for that particular variable.

• Maximum: The line above the box represents the maximum value in the data for that particular variable.

• Quartile: The box represents 50% of data points between the 1st and 3rd quartiles.

• Quartile 2 or Median: The vertical line inside each box represents the median value of the data set for that particular variable.

• Outlier Data: The outlier data only exist in variable Expected year of schooling and GNI per capita.

Similar statistics are explained in detail below:

Table 2.1: Descriptive Analysis of Each Variable based on Degree of Human Development

Variable	Degree_of_Human_Development	Minimum	Median	Mean	Maximum	SD
Expected_years_of_schooling	VERY HIGH HUMAN DEVELOPMENT	12.04	16.12	16.14	21.95	1.82
Expected_years_of_schooling	HIGH HUMAN DEVELOPMENT	11.19	13.61	13.60	16.87	1.14
Expected_years_of_schooling	MEDIUM HUMAN DEVELOPMENT	8.28	11.60	11.50	13.72	1.13
Expected_years_of_schooling	LOW HUMAN DEVELOPMENT	5.01	9.70	9.30	12.66	1.87
GNI_per_capita	VERY HIGH HUMAN DEVELOPMENT	14428.80	39870.68	42929.79	131031.59	20854.39
GNI_per_capita	HIGH HUMAN DEVELOPMENT	5039.04	13009.07	13184.34	26903.25	4763.56
GNI_per_capita	MEDIUM HUMAN DEVELOPMENT	2253.35	4960.53	5694.22	13944.13	2682.41
GNI_per_capita	LOW HUMAN DEVELOPMENT	753.91	2132.96	2385.03	5689.35	1284.51
HDI_Value	VERY HIGH HUMAN DEVELOPMENT	0.80	0.88	0.88	0.96	0.05
HDI_Value	HIGH HUMAN DEVELOPMENT	0.70	0.74	0.75	0.80	0.03
HDI_Value	MEDIUM HUMAN DEVELOPMENT	0.55	0.61	0.62	0.70	0.04
HDI_Value	LOW HUMAN DEVELOPMENT	0.39	0.48	0.49	0.55	0.05
Life_expectancy	VERY HIGH HUMAN DEVELOPMENT	72.58	80.21	79.45	84.86	3.29
Life_expectancy	HIGH HUMAN DEVELOPMENT	64.13	74.25	74.00	78.93	3.27
Life_expectancy	MEDIUM HUMAN DEVELOPMENT	58.74	69.66	68.43	76.68	4.72
Life_expectancy	LOW HUMAN DEVELOPMENT	53.28	62.05	61.95	69.02	4.37
Mean_years_of_schooling	VERY HIGH HUMAN DEVELOPMENT	7.28	12.14	11.62	14.15	1.47
Mean_years_of_schooling	HIGH HUMAN DEVELOPMENT	7.02	9.39	9.47	11.81	1.26
Mean_years_of_schooling	MEDIUM HUMAN DEVELOPMENT	4.07	6.50	6.51	11.10	1.52
Mean_years_of_schooling	LOW HUMAN DEVELOPMENT	1.64	3.93	4.25	6.76	1.37

Table 2.1 shows the mean, median, minimum, maximum and standard deviation values for each SDG mentioned above and for the HDI value too, with respect to different degrees of Human Development Index.

2.2 To compare and contrast the ‘GNI columns’ for ‘very high’ and ‘medium development countries’ and to conduct an analysis to assess whether the ‘very high development countries’ translate their income better than the ‘medium development countries’ in the areas of human development.

• In this section, we analyze the economic sector for both: Very high human development countries and Medium human development countries.

• The analysis is based on the GNI per capita given in the data set.

• The aim is to find out how the GNI per capita would impact the HDI value between the two groups (Very high and medium human development countries), and whether the very high human development countries translate their income better than the medium development countries.

2.2.1 Understanding the distribution of variables

Figure 2.3: GNI distribution for very high and medium development group

The above figure 2.3 shows that the distribution for both groups are skewed. Hence, we use the Log-transformation on GNI per capita for further analysis.

Figure 2.4: GNI distribution for very high and medium development group

• Figure 2.4 shows the distribution of GNI per capita in logarithm.

• Here, it is clear that both group’s GNI values display normal distributions.

• We can see that very high human development is significantly higher than medium development countries in GNI values, and only a small portion of countries from the medium development group overlaps with the other group. This indicates that higher GNI may result a higher development county.

2.2.2 GNI Summary Statistics

Table 2.2: GNI per capita summary statistics

Degree_of_Human_Development	min	q1	median	q3	max	mean	sd	n
MEDIUM HUMAN DEVELOPMENT	7.7	8.3	8.5	8.9	9.5	8.6	0.4	37
VERY HIGH HUMAN DEVELOPMENT	9.6	10.2	10.6	10.9	11.8	10.6	0.5	66

Table 2.2 shows the summary statistics for GNI_per_capita log values where ‘n’ represents count of countries, falling under the given degree of human development.

Figure 2.5: No. of Countries in each degree of HDI V/S GNI per capita

By comparing the summary statistics in table 2.2 with the figure 2.5, it is clear to see that the GNI per capita in the very high human development group is overall higher than the medium human development. This may suggest that higher income will result in a high human development group, which means a higher HDI value.

2.2.3 Comparing the regression

Figure 2.6: HDI Value V/S GNI per capita for Very High and Medium HDI Group

• In Figure 2.6, we compute linear models between GNI and HDI values for both group.

• We can see that the regression line for the very high HDI group is above the medium HDI group. However, as the GNI values for both group do not overlap with each other, we generate the model summaries for both group as follows:

Table for Very High HDI group

	Log of GNI per capita
Predictors	Estimates	CI	p
(Intercept)	4.67	3.26 – 6.07	<0.001
HDI_Value	6.71	5.11 – 8.30	<0.001
Observations	66
R2 / R2 adjusted	0.525 / 0.517

The above table shows a slop of 6.7067 for Very High Human Development Group Category.

Table for Medium HDI group

	Log of GNI per capita
Predictors	Estimates	CI	p
(Intercept)	4.84	3.02 – 6.65	<0.001
HDI_Value	6.01	3.08 – 8.94	<0.001
Observations	37
R2 / R2 adjusted	0.331 / 0.312

The above table shows a slop of 6.0107 for Medium Human Development Group Category.

• Therefore, very high HDI groups shows a higher slop than medium HDI group. A higher slope means that the very high HDI group translate their income into the HDI values better than the medium HDI group.

Now compairing with Diagnostic plots:

Figure 2.7: Diagnostic Plots for Linear Models

In figure 2.7, the left side diagnostic plot shows predicted values for very high HDI group and right side diagnostic plot shows medium HDI group.

Table 2.3: Very High HDI Group Linear Model Values

r.squared	adj.r.squared	sigma	statistic	p.value	df	logLik	AIC	BIC	deviance	df.residual	nobs
0.5247895	0.5173643	0.3244632	70.67715	0	1	-18.34599	42.69197	49.26094	6.737687	64	66

Table 2.4: Medium Group Linear Model Values

r.squared	adj.r.squared	sigma	statistic	p.value	df	logLik	AIC	BIC	deviance	df.residual	nobs
0.3311233	0.3120126	0.3627941	17.32654	0.0001946	1	-13.95765	33.91531	38.74806	4.606685	35	37

• By checking the diagnostic plots of the linear model in 2.7, we can see both model are normal distributions and the model do provide a goodness of fit to the data.

• However, if we look at the r-square value in 2.3 and 2.4, both model shows a low coefficient of determination. This suggests that GNI is not the only fundamental variables that determines the HDI value.

• Therefore, we can conclude that although the very high HDI group performs better in both GNI and HDI than medium HDI group, there is only a medium correlation between GNI and HDI values to show that very high HDI translates income better.

2.3 Calculate the gap between the ‘expected years of education’ and the ‘average years of education’ for countries with different levels of Human Development, to analyze if countries with high levels of human civilization are estimated to have high levels of expected education. Therefore, judge if it is inaccurate to use the ‘average value of expected years of education and average years of education’ for the calculation of HDI.

Figure 2.8: Gap between the ‘expected years of education’ and the ‘average years of education’, for different levels of Human Development

The figure 2.8 indicates that the residual between the expected years of education and the average years of education in some countries with high human development is larger than that in countries with low human development (Kovacevic, 2010).

Table 2.5: Top 12 Countries with high residual years of schooling for different Degree of Human Development

Country	Degree_of_Human_Development	residual_years_of_schooling
Australia	VERY HIGH HUMAN DEVELOPMENT	9.229639
Bhutan	MEDIUM HUMAN DEVELOPMENT	8.908858
Benin	LOW HUMAN DEVELOPMENT	8.788222
Turkey	VERY HIGH HUMAN DEVELOPMENT	8.495846
Morocco	MEDIUM HUMAN DEVELOPMENT	8.073170
Uruguay	VERY HIGH HUMAN DEVELOPMENT	7.909910
Tunisia	HIGH HUMAN DEVELOPMENT	7.905390
Grenada	HIGH HUMAN DEVELOPMENT	7.837766
Timor-Leste	MEDIUM HUMAN DEVELOPMENT	7.821715
Burundi	LOW HUMAN DEVELOPMENT	7.781347
Nepal	MEDIUM HUMAN DEVELOPMENT	7.742130
Belgium	VERY HIGH HUMAN DEVELOPMENT	7.724110

The table above 2.5 shows the specific countries information that have the 12 highest residual (Gap between the ‘expected years of education’ and the ‘average years of education’) values.

• This shows that some countries with high human development overestimate the expected years of education for people in their countries.

Table 2.6: Summary: Residual years of schooling (RYS) for different Degree of Human Development

Degree_of_Human_Development	Minimum RYS	Maximum RYS	Median RYS
VERY HIGH HUMAN DEVELOPMENT	1.462530	9.229639	4.112699
HIGH HUMAN DEVELOPMENT	-0.174090	7.905390	4.157615
MEDIUM HUMAN DEVELOPMENT	0.928100	8.908858	4.987901
LOW HUMAN DEVELOPMENT	0.496258	8.788222	5.108076

However, table 2.6 shows that the Residual Years of schooling (average value of the difference between the ‘expected years of education’ and the ‘average years of education’), with a ‘high degree of human development’, is smaller, which contradicts the previous observations.

Figure 2.9: Detals about medium residual years of schooling for different Degree of Human Development

• By figure 2.9 we further observe that because there are more countries in ‘high HDI group’ than ‘low HDI group’, and only a small part of ‘high HDI group’ have excessive differences.

• Although countries in ‘low HDI group’ has lower ‘maximum difference value’, the large difference in most countries leads to a large average.

• Therefore, it is accurate to use the ‘average value of expected years of education’ and ‘average years of education’ for the calculation of HDI.

2.4 Compare and contrast HDI ranks for 2018 and 2019 i.e. compare ranks for countries and examine their decline or increase in HDI rank from 2018 to 2019.

There is a difference in HDI ranks for some countries from 2018 to 2019. The value below shows the number of countries experiencing different HDI values in both years.

Table 2.7: No. of countries with rank difference

No. of countries with rank difference
112

The above table 2.7 shows the total number of countries which have different HDI rank for the 2018 and 2019.

Figure 2.10: Rank difference v/s Countries

Figure 2.10 represents a relationship: ‘Difference in 2019 HDI rank and 2018 HDI rank’ v/s ‘Countries of different HDI Groups’.

• We observe that there are more countries that have experienced a decline in rank from 2018 to 2019 (negative values on graph), than the countries whose rank has gone up.

• Out of countries that have experienced a decline in rank from 2018 to 2019, higher ‘negative values’ are observed for ‘high HDI group’.

• Out of countries that have experienced an increase in rank from 2018 to 2019, maximum increase is observed among ‘high HDI group’ as well.

Table 2.8: No. of countries with same rank

No. of countries with the same rank
77

The above table 2.8 shows the total number of countries which have the same HDI rank for the 2018 and 2019.

Figure 2.11: Countries with same HDI rank for 2018 and 2019

The above figure 2.11, gives the names of countries which have maintained their rank form 2018 to 2019 (no change in rank).

• It also shows that lowest rank is for Norway for both the years, which belongs to very high HDI group.

3 Conclusion

• Most countries fall under Very High Human Development and few under Low Human Development.

• HDI value, life expectancy, and mean year of schooling have more values as compared to ‘expected year of schooling’ and GNI. Also outlier data only exist in variable Expected year of schooling and GNI per capita.

• Higher income will result in a high human development group, which means a higher HDI value.

• Very High HDI Group translates income better.

• It is accurate to use the ‘average value of expected years of education and average years of education’ for the calculation of HDI.

• There are 122 countries that have a different HDI rank for 2018 and 2019. Out of which, more countries have had a decline in rank from 2018 to 2019, than an increase.

• There are 77 countries that have the same rank for 2018 and 2019, out of which, Norway has maintained its 1st rank overall.

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